AT&T Unveils Usage-Based Pricing

As Todd Spangler wrote in Multichannel News [subscription required], “It might be the beginning of the end for the all-you-can-eat broadband buffet”, as AT&T announced usage-based pricing last week for its DSL and U-verse customers. According to Multichannel [this link free], Sanford Bernstein senior analyst Craig Moffett says that this move may provide “air cover” for large U.S. cable operators to do the same. As more users are watching “over-the-top” video services instead of just web-surfing on their broadband connections, cable systems financial models are eing stressed.

Comcast, Cox and Charter cable systems already have usage caps on their broadband services and Canada’s Rogers moved to consumption-based broadband pricing several years ago. Time Warner, however met with customer resistance when it experimented in 2009 with usage-based pricing on some of its systems.

So what does this all mean for the average couch potato? Well if you were expecting to cut your cable service from the SuperOptimal Platimum Tier to Basic Cable and watch all your shows on Hulu Plus, your broadband provider just might have something else in mind.

Net Wit: Why Neutrality Matters

In an article in the September 6th issue of Time Magazine, Joel Stein makes the case against net neutrality by arguing that limited bandwidth needs to be allocated fairly. He says that is why your cell phone company “allows 911 calls through first, phone calls second, instant messages next and Web searches last.”

Allocating bandwidth is fine if you are an over-the-air broadcaster or cell phone company where there is limited (government licensed) spectrum. But let’s think about where most of us get our home internet service. Unless you are stealing it from your neighbor’s unencrypted router, chances are you are getting it from your cable company – which is also in the business of selling you pricey “silver” and “gold” packages of pay-tv channels.

What happens if you and a majority of the people in your franchise area begin watching True Blood, Dexter and Rescue Me by downloading them from Bit-Torrent? You and your neighbors cancel your high cost cable packages and opt for the basic package plus internet service. Watch your cable companies revenue decline while bandwidth usage goes up, making it harder for them to stream “on-demand” movies to those people who are still stupid enough to pay for them. How do you think that will make your cable company feel about net neutrality? Just Google “tiered service“.